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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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Us 28, Sandy 16, Washington 12, U.s. 11, Greece 10, New York 10, Europe 8, America 8, Rick Santelli 7, Bob 7, Macy 6, Activision 6, Cisco 6, Ackman 5, China 5, Gary 5, United States 4, S&p 4, Dan 4, Jim 4,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    November 13, 2012
    9:00 - 12:00pm EST  

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automatically if they don't push ahead on some very significant reforms to get the consumer going. we'll see. >> thank you for being here, steve. thank you. hand out a pin to everyone you know. join us tomorrow. "squawk on the street" begins right now. >> markets waking up to the first full day of business after yesterday's holiday and the news flows back in full swing. good morning. welcome to "squawk on the street." i'm carl quintanilla along with melissa lee, jim cramer, david faber live at the new york stock exchange. futures in the red on cautious commentary from some retailers. management shake-up at microsoft and weak german business sentiment and this prolonged spat between the eu and imf over how to reduce greek debt. a beat and raise for the quarter for home depot.
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>> the man in charge of whippedos eat leaves microsoft just weeks after the product launches. >> jcpenney hits new lows. investors have to recognize that jcp is really two companies. we'll hear what he told becky, andrew and joe. >> lockup of all facebook shares tomorrow. >> first up, shares of home depot rising in free market pchlt home improvement retailer earned 75% a share in the quarter. that beat estimates. home depot raising full-year guidance citing signs of recovery in if the housing market. jim, 4.2 on global comps. 4.3 in the u.s. frank referring to what he calls a healing in the u.s. housing market. >> he's remarkable.
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he's correctly been negative when it was right to be negative. he's now positive. i was most concerned that this company would have a big dip right here because there's a lot of companies that are reporting that the last few weeks have been bad because of sappndy. didn't skip a beat. stock was down after a series of headlines that misinterpreted the charge. this one could be off to the races. >> what's interesting about home depot, they didn't outline sandy impact because it would be the pull forward in terms of sales in preparation for the hurricane but the books did close prior to sandy so full impact of sandy won't be felt. color expected on the conference call but that could be a key driver going into the last quarter of the year. metrics on the quarter were good. best ticket growth in four years in terms of ticket size. average ticket 54.50. up 2.9% year on year. even below the surface the numbers were really solid for
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home depot. >> one of the things that blake talked about on the conference call is investment in your home starting to grow faster than gdp? he's used that as yardstick to say we're still not there yet. we're still not there even though he's been doing the numbers. i want to know whether we're there in surpassing it. yesterday there was a good conference call. people didn't like it. i think that was one of those judgments about people saying, you know what? i want to take profit. stocks up 53%. home depot looks like it's not going to fall prey to fiscal cliff profit taking. need to know more. very few stocks available to go through there. >> lowe's reports next week. lagged for 13 quarters on comps. is there any reason to believe that others will ride depot's coattails? >> i think that frank blake is a remarkable man. dick's i see good numbers from dick's today. again, very well managed
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company. seeing interesting numbers from coors. the stock gets slammed down 7%. >> what did you think of the numbers? a strong quarter they reported but the outlook is not strong at all. >> in the conference call they were able to list in a bit beforehand. talking about asia being good. talking about opening 50 stores. talking about the possibility of 45% comps. let's contrast that with jcpenney's comps. >> details. details. >> if you consolidate those -- >> shades of gray. >> you're terrible. >> interesting that depot really as melissa said left sandy out of the conversation. coors and sacs. >> you are brought up short.
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that flagship store is just a huge part of their business. they missed business. >> the tourists were not in town or they were trapped here in hotel rooms. and then also for the average consumer, if you are spending more money on plywood and generators and water, you may not be spending on that fur scarf or cashmere sweater or whatever it is you are buying at saks. >> the insurance companies really balking because of this flood damage. you get cuomo giving you $30 billion, you're not going to immediately go to that floor with the own zip code, the shoe floor at saks. >> there is not a store that has a zip code that i have not been shopping. just to see. women love to try on shoes. there's ten guys who just try on -- sorry. where are we going here? >> i have to quickly get this back on home depot.
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>> i'm trying to transition. work boots. >> you have nice legs. we don't see them very often. >> how do you know that he has nice legs? >> we have known each other for a long time. >> i could take my shirt off and send that picture to you. >> it worked for milton for years. >> there was a cross situation going. no cross. >> wilson. >> okay. let's go back to the matter at hand very quickly. >> let's. >> home depot is more wood and more saws and not shoes. it's not high heels. it's not four inches that you prefer. jimmy is not going to have a blowout quarter. i predict this will not accrue to them. just to be very isolated. military -- i'm really off the reservation. >> not reflective. >> doing black flips. >> the degree of divfficulvvffi
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incredible. >> really? >> less than a week after jcpenney posted a much larger than expected quarterly loss, william ackman is defending the turnaround plan saying it will work and that his transformation of stores into the new jcp will double the amount of money generated per square foot. >> as you open a shop, he makes it available. fastest growing retail startup of all time. high dollars per square foot. high gross margins. stick with me. low overhead. he's winding down the old jcpenney and using cash flow for this business. >> do you buy that? >> fastest growing -- let's talk to mickey if that's the case. >> the startup is what he said. retail startup.
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>> i wonder if some of the good people at tjx would agree with that. >> when comp store sales are down 26%, you're doing something very, very wrong and you cannot recover from that. you've heard that. i heard that. >> been in that business for years. >> if you want someone in your corner who is articulate that can at least get people excited, i can't think of anybody better than bill ackman in many ways. he seems to completely believe in mr. johnson. it's a fascinating story. it's a $4 billion market cap company at this point. a name we all know. it's a really interesting story just from a perspective of will he or won't he, can he create a new retail model. >> remember when gm was first challenged by toyota or honda and they realized we can't just immediately become toyota because we'll lose our core base of gm buyers. they opened saturn. it's the fastest growing car
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retailer of all time to mimic mr. ackman. and where did it get gm? retail is a much tougher business than people realize. the number of retailers that have not got through a transition is monumental. i just question whether they have the balance sheet, the preferred yesterday fell off the cliff. the preferred is smarter. >> also, the number of sales per square foot that ackman started, it didn't strike me as much. $270 per square foot. i went into the data base of sales per square foot. it didn't strike me as a goal to aspire to. >> apple is the highest there is. >> 6,050. i went down the value chain. i didn't get to macy's.
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publixs $480. >> amazing rotisserie chicken. a guy at that takes bags to your car. >> publix is above everybody. >> whole foods -- >> to your point on square footage, at the news stores it's significantly more than the old stores. it's up dramatically from -- so that's what he's banking on. get to 274 across the entire company, then you are somewhere better than where you are now. to your point, keep an eye on the preferred there. they have 1.5 billion in available credit and half billion in cash and they develop more cash during the course of the last -- >> hope springs eternal. it could catch fire. does pvh worry about getting paid? do suppliers worry about getting paid? defactors. >> they made it through. sears made it through. that's why jcpenney could make it through.
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this is 11% of the stores that have been turned. are they in the right? did he cherry pick the areas? maybe jcpenney is in areas where it wouldn't fly. you spend a lot of money and you get a coupon that saves you a tremendous amount of money. >> as david knows. >> of course. top of my wallet. >> how do you think he keeps that skin baby smooth? >> you should come with me and be surprised how much damage i can do there. >> probably going to have to spend a week going to all of the darn stores that you've been to. >> a big change in microsoft. the announcement comes shortly after the software giant launched the windows 8 operating
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system. sinofsky is ready to put his creative juices to work in areas that could be on the competition side. >> this is a stunner. came out last night when the chiefs were ahead which is monumental in itself. the news came out at night. it was one of those things where quickly there's a bomber squid and then there's the sinofsky squid and then stock trading down. when someone leaves, it isn't necessarily a good sign. i don't feel like this is one of those work is done everything is fine. disarray whether it be apple or at microsoft does not create a higher stock price. >> do we think it's connected at all to windows 8 and to what has been a less than -- >> did he go to a new job? there was not -- no. there wasn't. there is a release that came out that indicates it was his decision. we always wonder.
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>> your decision to clean out his office within 15 minutes versus be escorted. where was the key line he wanted to spend more time with his family? >> that's not in there. that's not. >> i always take people at face value. a lot of people, it looks like they're fired. what they really want to do is take a permanent vacation to go with their permanent intellectual vacation. >> as the memo says, after 23 years at microsoft "seeking new opportunities that build on these experiences." he's clearly going to do more of what he's been doing somewhere else. >> where is he going? where do you build your experience of windows 8? where's the next place you go? >> it confirms the fears about the success of windows 8 and windows 8 products. look at this survey of pc users. 64% had no familiarity at all
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with windows 8 at the time of the launch. two-thirds did not plan to buy a pc in the next 18 months. people have no idea this product is out there despite the dollars spent and that people don't want to buy a pc any way with this thing in it. how does microsoft win on this? that's why this news is troubling. >> there's yield. a greet balance sheet. >> enormous amount of cash. >> was he going to succeed steve balmer? panic at microsoft? these are questions that have to be answered and the market is answering them right now saying there's panic and trouble. >> zip car says it's on track to record its first full year of profitability. is the worst over for the car sharing company? we'll talk to the ceo a little bit later. tesla motor ceo. how much of a game changer is the company's model s vehicle? lot to talk to him about. >> great get. >> weakness. bond market open again today. more stre"squawk on the street"
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let's solve this.
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look at futures. dow down 69 points. microsoft on that index as sinofsky leaves microsoft.
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800 million shares of facebook shares outstanding held by insiders became eligible when the lockup expires tomorrow. most notably the most recent one which happened at the end of october delayed slightly because of hurricane sandy. that resulted in a 5% decline in the company shares here. can the company avert this sort of downdraft in the stock with so much coming to market tomorrow? >> i know people recently visiting them. there's a new revenue stream they have. it's gone from .5 million a day in june to 3 million a day in september. that's a remarkable run rate of the billion dollar run rate that has to be respected. i also feel that there are people that very much want to be in this stock on this secondary. i'm not going to discourage people from doing it. stocks come down quite a bit. it does have a good story. >> "times" has a story about how
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easy it is to hide your identity on facebook. it's sort of eroding trust in the brand long-term. 300 people devoted to doing nothing but policing those fake accounts. incredible. >> when we started on the web, there was -- when i started street.com, there were sites that had remarkable page view growth. when companies went to go public, what we discovered was a russian page view generator that did nothing but generate pay views. a lot of sites were heavily inflated by that. people were speculating that there was a similar generator if facebook. i don't believe that. i think they have a lot of users. i'm not as bearish as others at this point. >> reminds me of the random era generator that we used to have. otherwise known as reggie. >> that has to take some people back. >> sorry. taking me back. >> all right.
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coming up enext, last night on "mad money" tackled the fiscal cliff. a year since marriott vacations became a stand alone company. we'll talk to the ceo ringing the opening bell here at the big board. looking at futures, a lower open across the board. we'll see how it plays out. more "squawk on the street" straight ahead. at optionsxpress we're all about options trading.
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about seven minutes to the bell. let's get cramer's mad dash. e-commerce up 47%. >> dick's is a remarkable company, carl. they are still putting up new stores. the formats change over time to be what the customers want. don't forget, they sell nike. they sell underarmor. very difficult to believe that underarmor could be bad. nike is a big china component. too much inventory in china. i like that he's are retailers you would have said maybe discretionary spending is down. they give you hope that the consumer is alive and well. i like the dick's trade. i like the underarmor trade. last quarter wasn't that great. a lot of people thinking good things about foot locker. retailers i expected more weakness than i'm getting. >> confusion over luxury because coors was good. coming quarter guidance wasn't. there's coach to factor in.
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what's the bottom line on luxury? >> if you are running coors, you should temper expectations to club them. they got caught with a lot of cold weather inventory. dick's has a lot of cold weather inventory and they didn't get hit. maybe that's because they have extra time. you got cold weather. i like it. gun sales matter. more important is we got cold weather and cabela's thrives in a cold weather situation. people want me to recommend those stocks. these have been two of the strongest stocks in this market. you puzzle over why. i rather not go there. to me it's just so self-preservationist. i would like to think that's a different part of the country than i live in. >> we'll talk about retail in a minute. what's the real cost of the fiscal cliff? we'll find out one top
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executive's answer to that question and six months since facebook went public. and we'll talk to ceo of marriott vacations worldwide after he rings the opening bell in just a moment. i still ship t in time for christmas?
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not too often you get three major indices moving a single point. that's what happened yesterday. hasn't happened since december 2nd of 2011. before that, you have to go back to may '96. unbelievable to wake up and see the dow moved 2,000th of a percent. more volatile than that today. >> i saw your tweet about 6:45 on that. i said to myself, that's incredible. 1968-'69 when you would hear the noise report at 3:40 in the afternoon. they would say the dow was unchanged. every day. dow was unchanged today. that used to be the way. let's hope that it doesn't stay too long like that.
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then you don't really need a lot of people to tell you what the market did. >> out to unch. the dow close to unchanged. not a huge mover today. goldman, 70 partners to be named soon. lowest number since pre-ipo days. >> let's not forget how many senior executives at that firm, longtime partners, have left over the last couple of years. quite a few. you have perhaps not as big of a replenishment of those partnership ranks as you have seen in the past given how many have left. lloyd blankfein making interesting comments in new york today. telling people what capital charges are and almost every trade when it comes to things in the bond market and the like. how much it is costing us in terms of the capital we have to hold against. very interesting. >> a lot of business leaders going to washington to meet with the president tomorrow.
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i think american express is the only financial services company that's gone that way. wall street being shut out to a large degree. >> a nice conversation with elizabeth warren. >> opening bell here the s&p top of your screen at the big board. marriott vacations worldwide celebrating the first anniversary as a public company. we'll talk to the ceo in a few moments. and over at the nasdaq, mutual of america foundation recognizing nonprofits that facilitated partnerships with community leaders. looking at other movers today. yahoo! will make news today launching more g-mail like e-mail service next month. one of the first big things that marissa mayer has on her agenda. >> i continue to be a believer that the culture she comes from, google, will really help. yahoo! lost its relevance and
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google is still very relevant. >> this is a stock up 7% for this year. a multiyear high on yahoo!. that's been an interesting take on this one-year chart. >> there's steve ballmer. question is leadership. yahoo! passed up microsoft. there's so many things that happened behind the scenes in tech that i find to be wrong. why did yahoo! pass on that? why did yahoo! fall behind? the revolution of tech -- you understand why warren benefuffe stayed away from tech. you talk about who is buying a pc. they sell many more each year and then they kind of stop. >> it's very, very difficult to reengineer technology company. certainly when you think about silicon valley and companies that have hit hard times. very view come through it and
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re-emerge. apple is one that we can all remember having done that. ibm. although not a silicon valley company but technology company. most recently perhaps ebay in a significant decline but i spoke to john at length on friday and it appears they have brought around their marketplace business in addition to continue strong growth at the paypal unit. it's difficult to do. when you come back to yahoo! you have to wonder how do they do it? >> is there an act two? cisco tonight almost every analyst on the street said they're going to miss. >> universal in both miss and then the guidance is going to be negative. david, when you spoke with stevenson, didn't you get the sense that the companies are done spending on anything other than amd on towers? >> they got to spend. you know, stevenson was very outspoken in saying fiscal cliff. we're not spending but we are. we're deciding to spend $14
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billion over the next three years. they absolutely have to in order to compete with verizon and make sure that they're there in a real competitive position with verizon. >> cisco has a big business. governments are cutting back. john chambers did well getting deep with governments and now that's something that is not flourishing. we never thought that the government wouldn't just keep spending. governments around the world. >> when at&t unveiled the big spending plan, it was juniper shares that went higher. cisco is here. the government business saddled below expectations on the street. a lot of people thought juniper was losing to cisco. >> i questioned whether they fell behind. i hate the group. it continues to disappoint because i think we're waiting for 4g, 5g.
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even the terrific ceo came on scott mcgregor said 5g is coming. we all wait 5g. >> verizon wireless going to spend a special dividend to parents. we'll see more of this in the next seven weeks. >> absolutely. >> we should point out that it is weak today because of write-downs in spain and other countries. that is weighing on the ftse in the u.k. of course as you point out, 45%, perhaps the greatest single investment. 45% ownership of verizon wireless. they have no power to run it but happy to take that dividend that's been a back and forth about that and that verizon may make a move. >> a lot of discussion today about the vix and why if we're all so worried about what is going to happen in seven weeks, why is it so low?
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>> it should be spiking. someone said the other day. jim, if the fiscal cliff -- if we're going to go over it. i hate to use this word. crashing. i think that there's still a lot of hope that we get a deal. when you have a piece like today in "times" how the u.s. should avoid falling off the fiscal cliff and offers solutions. when you hear that bearish republican think tank people say we can do that. you get emboldened to think there's something in the wind. >> we're looking at the spot vix. if we look at vix curve and futures, that's much steeper. there's more volatility priced in for later months and not at this moment in time. >> flat relative to what we're saying, yes, no? >> yes. i see many reasons to sell. i always take my cue from the market to say look at home depot. that can weather the storm. when you have good earnings and you deliver and you have an
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outlook that's positive, stock is being rewarded. sherwin williams about its acquisition about another paint company. people loved it. they just loved it. precision cast parts. it will make a strong case why it bought titanium metals. companies taking action are doing better. >> let's check in with bob pisani on the floor with more on what's moving this morning. hi, bob. >> good morning. let's get a wide shot here. stocks have opened as normal here down on the trading floor. might remember there was a trading glitch yesterday. the new york stock exchange has been rolling out a new trading platform for several months since september and every week they add more stocks. yesterday there was a trading glitch with matching engine for new stocks they were putting into this new trading platform. 216 of them. problems throughout the day and bottom line is they fixed that. they went back to the old system right now and stocks have opened as normal. that's the important thing. i think what's going on here is overall equity trading volumes are weak and continue to be
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weak. nyse last night published their volumes for october. they were notably to the weak side. cash equities in the united states were down 8% from september to october. 39%, 39% year over year. clearly some of this was because of hurricane sandy. hurricane sandy started on october 29th. the market was closed october 29th and 30th. that would definitely impact trading volumes obviously particularly year over year. 39%, that's more than just sandy. this is not just nyse. this is all trading volumes across the united states on all trading platforms are down. that's the reason you see these deals like the ones with jeffries and the ones with kbw. cash equities business is in serious trouble because volumes are down. penny spreads don't enable the kind of profits that used to be made from that industry. elsewhere hurricane sandy showing up in a lot of commentary. you saw this morning guys were mentioning what was going on
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with saks with softer sales in november occurring in the aftermath of hurricane sandy. elsewhere i was pretty impressed with the retail sales numbers. overall, dick's, home depot, tjx, all were terrific overall here. i was very impressed and heartened by home depot's comments. they were helped somewhat by hurricane sandy. did you see this line in their report? they said we have said q-3 is a path toward the healing of the housing markets. biggest quote of the morning. stocks opening as normal here at the new york stock exchange. back to you. >> very good points. someone recommended on the yield basis that people were concerned that people aren't doing anything. i wish congress would move. seems like they are possessed by petraeus. seems like they are not possessed by the fiscal cliff. possessed by petraeus. rick santelli at the cme group in chicago. go ahead, rick. >> thanks, jim. if you look at interest rates which were closed yesterday for
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veterans day you can see we're off several basis points. if you open it up to charts starting in august, early august, you will see that the fixed income markets whether it is our tenure as you see the chart, our 30 year, a two-month low yields or boom which is getting very close to going to three-month low yields, there's lot a lot of economic optimism as represented by the fixed income markets and when you throw in some of the recent behavior in equities, picture starts to jegel. german two year, it's becoming more like a swiss two year. highly negative in terms of two-year yields in the summer, july and august, it moved back up a bit. optimism. lack of optimist can be seen as we continue now to dip in negative territory and it's only about minus four basis points but look at the headlines. look at where the trading is today. it's the correct leader if you
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look at the economic variables out recently. david faber, back to you. >> thank you very much, rick santelli. want to update a story we brought you a couple weeks back on the potential sale of advanced auto parts. the stock had risen fairly sharply after we first reported that the company had hired an investment bank to potentially sell itself and the most likely audience for that sale would be private equity. it was early in process when we reported it. it's still relatively early in the process. people familiar with a potential transaction and close to the talks tell me could still be a couple months before we see a potential deal. as you see, of course, advanced auto parts about $6 billion company. that being said, what i'm hearing is about three to four private equity firms are actively engaged in due diligence and investigating a likely bid.
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those suspects would be leonard green and so forth. a deal could require as muches a $2 billion equity check. 5.5 to 6 times leverage. the company still when you get up there with a premium on where it is right now, that's a big number. that could require, in fact, a so-called club deal. a deal in which two private equity firms get together because you do not want to write that large a check. it's also possible they could reach down to their limited partners and ask them to participate directly in the deal. finally, one of the key reasons why there's a lot of interest here, it's not just retail. it's not just great success. think about dollar general or auto zone. huge returns that they saw in those deals in the past. it's also because there's an opportunity to significantly increase the margins at advanced auto. o'reilly, one of its key competitors has 16% dividend margins. advanced, closer to 10. there's a look at o'reilly how
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it opened today. o'reilly is one of the fewer plays out there competing against auto zone which has higher margins. on the strategic front, i don't hear there's any interest in pursuing this deal. on the equity check and potential audience being retail focus, don't forget best buy. having its analyst meeting today at the best buy theater here in mid town manhattan. we'll see what we get out of -- we see what we get out of best buy. if you have a pe firm that focused on retail and focused on raising money for a huge deal, that being advanced auto, you might imagine they're not going to be as inclined. the same audience of potential buyers to go after a best buy. that does sort of mix in. >> 11-year-old average cars. i like this story. positive. >> melissa, over to you.
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>> first anniversary as a publ traded company, marriott vacations worldwide. the stock up 117% over the past year. let's bring in the president and ceo of marriott vacations worldwide. great to see you. >> great to be here. thank you very much. >> why do you think the stock is up so much? what accounts for demand in this economic time for time shares? >> well, clearly one of the things why people buy time shares is because you're prepaying your vacations for a lifetime. as a result, people love to go on vacation. it's one of the last things in the world they'll give up even in tough times. people see the value of owning their vacation versus renting it. the reason why the stock has gone up is because the investment community has looked inside our company and understand what value drivers are which was tougher to do when we were part of marriott. >> in terms of the marriott of time shares, how can people understand whether they go up, down or sideways. does it have anything to do with the real estate market more
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broadly? >> it's really not connected to the real estate market. it's about prepaying your vacations. when people think about that whether talking about renting hotel rooms or costs go up over time and people understand that by fixing that cost when they make the initial purchase, they avoid some of that inflationary creep over the years. >> have you used low interest rates to acquire more properties out there? >> we haven't at this point in time because we have an excess of inventory that was a buildup prior to the economic downturn. >> uncertainty from the economy or the fiscal cliff, does that prevent consumers? are you worried about consumers not being willing to buy a time share? >> absolutely. there's a direct correlation between what we call a closing rate or percentage of people that we talk to that actually buy and consumer confidence. and as consumer confidence has a tendency to move, so does their desire to buy a time share.
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hopefully over time the consumer confidence number will continue to climb and everything will get better. >> you watch washington very carefully over the next few weeks. >> very carefully. it's got us all concerned. we're hopeful that now with the election behind us, they'll start moving in what we hope to be the right direction for the country. >> a pleasure to speak with you. thank you so much. >> thank you very much. >> president and ceo of marriott vacations worldwide. over to you. >> thanks. when we come back, an electric car company believe it is has the right kind of spark. has tesla made the right transition? the ceo says the answer is yes. we'll have a live interview coming up. activision taking aim at the sales crowd for holidays. one of the biggest entertainment launches of all time. more "squawk on the street" is back after a break. from 17 billion chips worldwide
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welcome back to "squawk on the street." i'm sharon epperson on the floor of the nimax. traders are worried about what's happening in europe. they are worried about the fiscal cliff and they are worried about the supply and demand that they are seeing for many commodities. we're looking at commodities weaker across the board and particularly in the oil market where the international energy agency has released another monthly report saying they see the global demand growth for oil sliding in this quarter and next year. they reduced the forecast there. we're also seeing production that is coming back online from the north sea. that's pressuring present crude prices and we expect to see another increase in crude supplies here in the u.s. for the weekly supply report. that also adding pressure to the wti contract. the only bright spark in the marketplace is natural gas. it is up for the second straight
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session. and there we may see a withdrawal from storage. first of the season as we get into the winter months. colder temperatures ahead also could help prop up natural gas futures. we're going to get that report on thursday from the energy information administration. i'm trying to get my acronyms straight here. on thursday we'll also get the oil report. it's going to come a day later because of the veterans day holiday. back to you guys. >> there are a lot of letters in your part of the world. >> there are. there are. >> thanks a lot, sharon. sharon epperson over at the nimax. there's more letters right there. steven sinofsky, president of windows division at microsoft leaving the software giant less than a month after the love it or hate it windows 8 that he spearheaded and led development of windows 7 release. complete this sentence. now that microsoft's window chief is out, windows might finally be able to do -- blank.
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we'll get to responses later this morning. any time we ask people to complain about technology, it's over the plate. people have no problem coming up with ideas about how their technology could be made better. true? >> yeah. i think there's a natural tendency to hate microsoft. xbox has success. use skype. there's a lot of aspects of microsoft that are doing well. we all experienced at one time or another a freezing like i have right now. i don't like those guys. >> the stock price is a report card on success of management over a long period of time. we're looking at it here. we could go back ten years. when does the conversation start about a successor to mr. ballmer? especially given that this gentleman has now exited and he was one time that people bandied about. >> it's a logical question. he's my age. >> you're young. >> thank you.
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>> we wouldn't talk about it if not for the fact that the stock lost all gains it made in the first three months of the year when we thought it was out of being dead. now it's back to being dead. those talks resume. >> i agree. i don't know. it's discouraging if you work there or a shareholder. >> fiscal cliff there and it survived. 2009 fiscal cliff. came back. windows cliff. >> die another day. >> president obama meeting with business leaders tomorrow in washington to discuss the fiscal cliff. why are bank ceos not attending? we'll explore that question but first -- >> announcer: coming up, we're all artists in some capacity. some bigger than others. cramer's talent lies in the markets. he'll show it off with six stocks in 60 seconds when "squawk on the street" returns. frank, instead of scratching your way to retirement,
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>>? the next hour we'll talk about home depot and two facebook analysts both think now is a buying opportunity also the ceo of zipcar in an exclusive. back to you.
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>> let's get six in 60 with jim. upgrade at dow chemical. >> goldman is talking about the super cycle of natural gas. a couple positive calls. this has been a horrible stock. they just reported batteries. they are saying it's a way to play a turn in the worldwide economy. >> secondary. >> many wonder why partnerships go down every day. they are frantically selling equity. no one wants to see that with markwe markwest. berry plastics. >> we have many analysts recommending it. no one is doing anything. packaging play. maybe it's a sleeper. >> and now this is one that has just been really terrible. online play for internet. goldman says buy it. this is a company who i hear good things about.
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>> and regeneron. >> it belongs in that list that goes much higher. >> what's coming up tonight? >> we have david code. the hope for the fiscal cliff. and there's a big deal in liquified natural gas market that i'm going to talk about tonight. >> big questions to ask tonight. >> dave is great. what can i tell you. >> and a neighbor as well. >> he's next door to me. a terrific guy. >> 6:00 and 11:00 eastern time. when we come back, putting the social network under the microsoft. we're one day away from facebook's largest post ipo lockup expiration. how do you play it and tesla ceo on the game plan for taking the electric car maker to the next level. "squawk on the street" is back in a moment. ♪
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welcome back to "squawk on the street." let's get the road map for the next hour. hope depot beating the street's prediction. >> almost six months since facebook went public. gearing up for a huge lockup expiration. roughly 800 million shares set to hit the market tomorrow. will we see another heavy round of selling? >> bill ackman sticking by claims for jcpenney's turnaround. shares sit at multiyear lows. >> new users continue to flourish. where will zipcar expand to next? we'll get an exclusive interview. a big earnings mover this morning. home depot. shares trading higher after third quarter earnings beat estimates.
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the senior research analyst has an overweight rating and $70 price target on home depot and also a senior research analyst at jeffries has a hold rating. good to have you with us. >> good morning. >> peter, let's start off with you. they were beginning to talk at the beginning of the conference call about hurricane sandy impact about in line with what we saw with hurricane irene. do you buy that? >> that's a fair assessment. a little beit of benefit in the third quarter. .4% lift to same store sales growth. in the outlook for q-4 not factoring in any benefit from sandy and they say it's too difficult to understand when those sales will come into their stores. they were going into the winter months so repair work could be pushed out to last year. overall a similar lift to irene is reasonable. >> you got a hold rating as we
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mentioned. we see the stock hit a 52-week low. the numbers below the numbers were actually quite good for the quarter. the best growth in four years. 2.9% was the increase in the average ticket size. why are you holding back on your rating on home depot? >> we were recommending it at one point coming out of the recession. valuation got rich and now about 19 times forward earnings. it reflects good news. we think they are doing the best job in the sector. >> if your call is to own home depot, why is it at a hold rating? other than things are higher rated than home depot? >> as i was saying, we're making a relative call going into print over lowe's. we preferred home depot over lowe's. >> does the valuation concern you as it does dan?
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>> it doesn't. the valuation looks expensive. if you look back at the last five years, you're looking at a depressed housing market. that's not a relevant valuation characteristics this is a stock that wants to play 20 times for. we grew earnings 23%. we think remodeling cycle based on survey work is accelerating into 2013. we think that growth rate remains intact. 19 times is pretty good valuation. any internals that show that we could use as derivatives for other trades. cabinetry, appliances, what's leading once you're inside the store, what's leading off the shelf? >> i think what's bouncing back is larger ticket remodeling projects. some of the things they've been calling out would be flooring, kitchen and bath. two stocks that we cover that
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would benefit would be lumber liquidators and tile shop. those are bouncing back more recently. >> dan, guidance on trades like that? do you agree with peter? does home depot have the ability to keep those prices down in order to improve their margins? >> home depot is buying well already. what you see is very good cost discipline allowing them to reinvest in price. a year ago they were losing market share to online players. we've seen that reverse in recent quarters. i think that's a function of the investment. >> dan, elsewhere in this space, what do you have as a buy rating. i understand the relative call between home depots and lowe's. what are buy rated stocks? >> buys on walmart, kohl's, five
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below. recently downgraded dollar tree no longer a buy on that one. >> looking out in terms of the housing recovery, i understand that most recently home depot said that they are more correlated to gdp opposed to housing recovery. what have you seen? >> they've been saying that for a couple of years they think gdp is driving their business but you are starting to see the ceo admit that housing has become more of a tail wind. i think it's a double positive for them. housing has become a tail wind. disciplinary spin on home seems to be picking up. we think it's a powerful backdrop going into next year. >> we'll leave it there. thank you. i was at my local home depot buying a 45-piece tool set for $11. >> do you know how to use them? >> it was a bargain.
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thank you. 45-piece tool set. >> you have to invest well in a tool set because a good tool set will last you for years and years. >> i don't think this one will. >> $11 i won't think will bring you quality. >> guess where it was made? >> china. >> correct. goldman sachs chairman making interesting comments regarding the looming fiscal cliff. mary thompson has that. >> speaking at bank of america financial conference. mr. blankfein concluded his comments a couple moments ago. he said the fiscal cliff eurozone crisis and slowing growth in china are problems that can be solved. he said we would be shocked if we don't get resolution on the fiscal cliff. until there is, there will be volatility in the markets. asked whether he's expected to see deals done given higher taxes in 2013, he said we'll see tax selling and there could be deals done ahead of that. and a comment also on executive sentiment which is always important.
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he says it remains one of caution in this environment. carl, back to you. >> wednesday is the day when they name the new partners at goldman, i believe. >> that's right. >> people waiting for the call. >> people close to or a source close to goldman sachs says it will be the smallest class in over a decade. probably less than 70 will be named partners at goldman sachs this year. back to you. >> thank you so much. mary thompson at headquarters. a big mover in drilling and natural gas space. >> weatherford this morning off 12% at 3.5 year low. the company warning that fourth quarter is going to come in for earnings below consensus on that number. and they also said that they still have not been able to resolve what they call material weakness in internal controls over financial reporting. they actually didn't break out their third quarter numbers. stock getting hit hard on a day
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when energy is already to the downside. >> motor trend magazine naming tesla's sedan the car of the year. will the model live up to the hype? we'll find out when tesla ceo elon musk joins us. >> just seven short weeks left to hopefully do a deal on the fiscal cliff. what can we expect to hear from washington today? we'll give you a preview later on. just to cheer you up as we head to the break, here's another fiscal cliff fact. >> the gross federal debt is projected to be over 107% of gdp in 2013. and is projected to rise to almost 108% by 2014. i'm glad we got cdw and cisco to design our data center.
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people are buying fewer video games but biggest titles are still blockbusters. activision predicting that special ops will be the most successful of the year. good morning, julia. >> i have been up all night
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playing this game. like many other gamers around the world. activision blizzard announcing that it shattered preorder records set by last year's call of duty modern welfare 3 which sold over $400 millions worth of copies in the first day. today's launch is expected to dominate the holiday as the franchise has since 2008. last holiday season it comprised 14% of all game sales in the u.s. gamers came out in force last night in an unprecedented 16,000 retailers around the world involving 44 gamestop stores in the u.s. testing out new features including streaming game play live on youtube. activision said last week it believes it will be one of the most successful launches of any form of entertainment in history. raising revenue guidance and earnings guidance for 2012 by 11 cents per share citing better
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visibility on black ops 2 preorders. one analyst projects the game will sell between 19 million and 20 million copies in the quarter saying that despite guidance presumes lower sales than last year, he's optimistic that the game will benefit from activision giving a lead to extra features for free allowing sharing among gamers. the franchise is the centerpiece of the business. eight prior games sold more than 6 billion worldwide and continues to build for strong execution. and concerns were raised after the company admitted on its conference call last week that last year's game was out sold the year before. based on record presales that activision presented this morning, it's not a problem for this year. carl? >> julia boorstin in l.a. thanks so much. we may have news of a major buying opportunity.
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facebook is bracing for its biggest lockup wave expiration tomorrow. 8 million shares held by insiders will become available to sell. that more or less doubles the number of shares that can be sold. here are two analysts who think you should buy the stock. michael is a senior analyst at webb bush securities. he's on the left. he believes that there's a 75% return on the stock because he has a $35 price target it brian is on the right with a $30 price target. he believes that there's a 50% return on facebook stock for you over the next year. both of you, i assume, think people should buy on weakness tomorrow. you have done calculations as to how many people are likely to sell. run me through that before we get to the crunch. >> we've looked at each of the cohorts of shareholders between venture capitalist, corporate investors, individual investors
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and describe probabilities that each will sell in the period that follows. it could be weeks ahead. we estimated that maybe 500 million shares will be sold. it's a very digestible amount of shares. >> wow. you double the float but still it's digestible and still you think -- >> that's not double. that's not double. that's 50% more shares. there's a big difference. >> what does digestible mean? is it x percent decline. how do we measure that? >> that's nine days worth of trading volume. the question is if shares showed up tomorrow, that would be a bad thing. clearly the market couldn't handle it. venture capitalist who divert shares will distribute most of those shares off institutions. they hold the stakes in the venture funds. they will not sell right away almost impossible. employees won't sell right away. >> forgive me. i thought you finished there.
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>> i was going to say on the buy side, there's pent-up demand that's waiting for the right price. if there was so much supply coming into the market at the same time, there would be demand to show up to pick up the shares. >> in fairness to you, you have been a bull through this process. what are you now telling clients? >> i think some of this has been anticipated by the market. we've seen the stock go from solso solidly in the 22 range down to 19 and it started to recover again. this last lockup a couple weeks ago added 100 million to the total flow because the company was able to with hold some of the stock and many executives chose not to sell. this time i agree with brian. i think you're going to see 500 million shares hit the market. i would say that's going to push the stock down. i don't think it's going to kill the stock all in one day. i think that people will stay away until they think the market has absorbed that stock. probably you have about 5% downside and i think the company
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fundamentals support a $35 value. so people are just waiting to get in. i think tomorrow you'll see it open down and close up. >> if you are correct, michael, that's a staggering investment that people can make. 75% upside. if we get to that $35 price target that you have. that's a staggering investment. surely they would have to take a sea change in the way that the market views facebook. it's not. that's not just a trade, is it? >> i think it's because we've had a disequilibrium between sly and demand. people weren't sure about mobile. supply overwhelmed the market and has since presidethe ipo. tomorrow that will happen again. this company is showing they are focused on driving revenue. you'll see 30% year over year revenue growth this quarter. i think you'll see it all of next year. the margin on that is phenomenal. earnings power of this company supports a 35 dollar share price. >> i'm fascinated by this notion that people are waiting for the right price to get in because
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the stock has been trading basically in a very small range for the past three or four months here. the stock hit a low of $17.55 and yet by staying in this tight range it hasn't been able to attract buyers. what do you mean by people waiting for the right price to get in? we've been at a stable price for quite some time. that hasn't been any catalyst. >> there are two types of buyers. shorts who have to cover. tomorrow probably about an hour into the open those shorts are going to cover because they'll see the stock not going down any further. there are people who are just afraid of oversupply who will step in. i think you'll see the stock tick up tomorrow. it's going to probably open weak. i think people are scared. >> brian, you make the assertion that people were lining up to buy at a low price. >> i think so. there's a long-term holders who were spoofed by the volume of shares that could come on and
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they're waiting. >> good to talk to you both. we'll see what happens. >> shares of jcpenney trading at multiyear lows. on "squawk box" this morning, bill ackman reiterate ed his belief in the ceo. >> a strong third quarter for zipcar. about to shift into overdrive? we'll talk to the chairman and ceo on post 9 in just a little bit. bob, these projections... they're... optimistic. productivity up, costs down, time to market reduced... those are good things. upstairs, they will see fantasy. not fantasy... logistics. ups came in, analyzed our supply chain, inventory systems... ups? ups. not fantasy? who would have thought? i did. we did, bob. we did. got it.
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at e-trade. jcpenney shares hitting a new low as ron johnson's turnaround efforts struggle to gain traction. on "squawk" this morning. take a look. >> what's going on and what you need to look at is these are two companies. we have a start up called new
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jcp that started august 1st. that has gone from 0 to 700,000 square feet. stick with me. >> interesting interview this morning. dan dana, always good to talk to you. >> thank you for having me, carl. >> i wonder what you made of what ackman said this morning. you can't look at jcpenney as a consolidated enemy. does that make any sense to you? >> it's a nice way to talk about it. the numbers are reported on a consolidated basis. you can talk about the changes that are happening and it won't be for a year or two years from now where a more meaningful part of the square footage will be there to say this is what the new transformation is doing. right now you still have weak traffic. you have weak sales. you're going to have a holiday
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season that's promotional for them. >> you made the point it's still to early to tell if this is going to work. there will be a point at which the cash you have on hand will no longer be enough to get you to the finish line however far away that is. when does that moment happen? >> i think it's still a ways from that. you'll go through the first half of 2013 and have more apples to apples comparison on what ron's plan versus ron's plan last year. right now you are still comparing it against the heavy discounts the last year. >> is your money on johnson winning this or not? >> i think it's going to continue to change. i think what he said he was going to do at the beginning, it shifted already. i think there's more changes to come. >> what changes still to come? a reversal back to what the original plan was? >> i think look at what you're doing with national brands. you are taking national brands and putting suggested manufacturer's price on and jcpenney's price so the consumer needs to feel they have a deal
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and we see them show value in the product besides the one-ticket price. >> one of the targets of bill ackman outlined this morning was the goal of price per square foot and he said his goal for jcpenney would be $270 per square foot in sales. how does that rank to other retailers? it seems very low and can jcpenney even if it improves that metric, can it compare when others are doing double, triple, quadruple that number? >> typically you have department stores and companies with big square footage like jcpenney. it would be a double from where they are now which is around $135 a foot. to me that would be a great target to get to. it will take a few years to hit those numbers. >> i thought you finished. forgive me. retail isn't complicated. if i buy the stock, what vision am i buying?
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what is this jcpenney that is the buy? what is he going to lay out for customers that they're going to flock in and spend money? >> it's interesting. exactly what you just said. stocks are in companies and companies are in stocks. if we can see momentum of same store sales getting less negative and down 26 to down 20 to down 15, the stock will move higher. as a company, it's going to take almost three years in order to get the brands and transformation to what he would like to see. it's different brands. it's a similar customer that's being able to be sold goods in a modern environment. if you were sitting in a bar with me and i said what does the new jcpenney look like to me as a customer, what would you say? >> i would say it's cleaner. more brands. it's in store shops that are more targeted. it's less merchandise strewn about the floor and speed to market in getting you faster goods quickly. >> i think you would say what am i doing in a bar with simon
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hobbs? that would be my first worry. >> i agree with you. >> thanks, dana. >> dana, thanks so much. >> thank you all. it's been a pleasure working with you. >> you know we're kidding, simon. >> it's okay. i have broad shoulders. >> we would talk about things other than jcpenney. zipcar locking in a solid third quarter growing membership base and full-year guidance. what's the ceos claims that 2012 will be the first full year of profitability? an update on that when he pulls into post 9 shortly. stay tuned. the new dell xps 12. part of a whole new line of tablets from dell. it's changing the conversation. ♪ it's changing the conversation. those surprising little still make you take notice. there are a million reasons why. but your erectile dysfunction that could be a question of blood flow. cialis for daily use helps you be ready
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♪ >> one hour into trading. the stories we're squawking about 7:31 on the west coast, 10:31 on wall street. hewlett packard falling to 52-week lows. and shares of gilead sciences hits an all-time high.
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>> it's game on meantime in an attempt to fix the fiscal cliff because the big meeting in washington on friday. obama meeting labor leaders today. eamon javers has more live from washington. >> we're about one hour away from the labor leaders and progressive group leaders meeting with the president on the issue of the fiscal cliff. they'll talk a lot about what to do on entitlement spending here. that's one of the areas where a likely deal would involve cuts. i've been talking to leading labor leaders in washington here this morning. they tell me what they're going to tell the president an hour from now. we're not in favor of benefit cuts on social insurance programs. they're also going to tell the president that he needs to stand firm on the bush tax cuts and they say they'll back him 100% if he does that. they feel, the labor leaders do, this election was about something and obama won. therefore he has a strong hand and they also say that government needs to drive a harder bargain with health care providers to bring down costs including things like negotiating prices on medicare
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part d drugs with the drug companies in order to lower prices there. let me give you a sense of who will be in the room here. we have a list of some of the labor leaders meeting with the president today including some of the leaders from seiu, a afl/cio and people from progr s progressive groups and moveon in the room as well. the message to the president is one of stand your ground. this election meant something. let's consolidate these political gains. they'll say they don't want to see any cuts to social insurance benefits whatsoever. back to you. >> at some point this week which the discussion is what tax system do we need to make america more competitive or is it just the spoils of the election. >> right now it seems what the president is doing is hearing from all of the groups. labor and progressive groups
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today. he'll hear from ceos of major companies later in the week and talk to congressional leaders on friday. for now they are tapping the heads of all of these people to get a sense of where they are and what they're thinking and what priorities are. at some point they're going to have to start to make tough decisions here and they're going to have to make some decisions that are going to alienate a lot of people who are going to be in the room with the president this week both on the business side and on the labor and progressive sides. that's where it will get tough. for now they are gathering a lot of information and string and making sure they talk to everybody. it will get tough after this. >> from tapping heads to knocking heads down the road. that's for sure. thanks a lot. meantime, former treasury secretary warns the government not to squander the opportunity it has to address the country's unsustainable and dangerous fiscal trajectory as he calls it in an op-ed for "the new york times," he says the clear eye debate of realistic plans is needed so we don't pursue the policy equivalent of a wild goose chase when it comes to tax deductions and exclusions.
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the president will meet with ceos to discuss the fiscal cliff tomorrow. we'll be there too. we'll bring you the latest. >> you look very proud in that. >> i know how much you are looking forward to going to d.c. this is a big summit. >> the names are unbelievable. mcdonald's, you name it. the who is who of s&p companies. >> glad you'll thereby be therer it. >> me too. >> diamond foods rising today. the company says that it will report its restated results following an accounting scandal that dogged it all year. in february the company disclosed there was issues with accounting with some $80 million in walnut growers. the stock down over 45% since then getting a big bounce today. folks are hoping this accounting issue will be put to rest.
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back to you. >> all right. thank you very much. the iea saying natural gas will overtake oil to become the most used fuel in the u.s. by 2030. david faber tackles that idea in an exclusive interview with co-founder of ncip capital management straight ahead next. >> and tesla ceo will join us. he thinks the company has what it needs to the long haul. hear what he has to say next on cnbc. ♪
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>> natural gas will be the most used fuel in the united states by 2030 overtaking oil. after reaching record lows earlier this year, it has a nice move back. the question is are we finally
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witnessing the beginning of that story natural gas boom? you are the largest private equity related firm in the energy industry in the u.s. certainly. you have great insights into this area. you shared them with us in the past. let's start off with that report from yesterday. it's something you've been saying for quite some time. give me a sense of this why this is important and why you agree with it? >> the most important thing to understand about these long-term projections is that they are just that. these are dynamic markets. if you go back five to seven years and look to where we are supposed to be today, you will see a different prognostication. one thing is really certain. the supply revolution in north america relates to natural gas today and oil in coming years. it's going to have a profound
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effect on every industry and every country in the world. it's real. the supply is not at various prices. the prices move around. the supply, the molecules itself, we have hundreds of years of supply. the question is where are they located? what is the price you need to pull it out of the ground economically and treated it like any other business. directionally the report is exactly correct. >> one of the key questions is how are we going to find new uses for natural gas. >> certainly something we have heard a great deal about is some fleets. for instance, the u.s. postal service were to use it or u.p.s. a realistic proposition in your mind? >> parts of it on the fleet side, long haul trucking side, specialized applications like that can be economic. i'm less optimistic about turning over the u.s. car fleet simply because the laws of supply and demand won't support
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it. if that much natural gas were being used, if we used 15% of the cars fueled on the road for natural gas, we would use 10% to 15% of today's production of natural gas. the price would then go up. if the price went up on natural gas, it would go down on oil because the demand dropped and then the fuels would have a comparative disadvantage. i think it's more of a specialized product as a relates to transportation fuels. the electricity, conversion of electricity generation from coal to natural gas has been stunning. this year alone over last year, about a 19% pickup in natural gas demand generating electricity. the market share of coal has gone from almost 50% to down in the 30% range which is a stunning reversal to do in one to one and a half years. >> the numbers are incredible. do you believe coal is on
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decline as a use of fuel in this country? >> i do in fact because of the costs. the costs to mine coal are higher than to produce natural gas. the market is an amazing thing. the market is doing what markets are supposed to do and that is creative destruction. >> what about oil? a lot of -- we forget of course a lot of fracking being done that's producing oil and it also produces natural gas, does it not? even though we may look at the recount and so forth in terms of natural gas, some are not accounting for how much gas is produced as a byproduct of the oil fracking. >> i think the market does pick that up because in all of the storage numbers and supply numbers, they are good about picking up associated gas. the question behind your question is simply that if price of oil stays high enough and we drill oil wells, we're going to have more gas production that comes along with it. in order to really correct the market and have a decline in natural gas supplies to help balance the market, and to get a
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lift in natural gas prices, you're going to have to see a decline in oil prices at the same time. that's starting to happen. the markets are a powerful thing. for every supply reaction, there's a price reaction. it has a way of balancing the market out over 6 to 18 month time periods. >> glad you saw through my question and came to the actual question after having a number of conversations. you do a lot of deals, of course. huge private equity firm. $13 billion in investments. are you on hold right now as a result of the fiscal cliff and other potential changes in not just regulatory environment but perhaps even more importantly in the tax environment? or are you going to continue to do those regardless? >> i think that we tend to invest through the cycles. we have seen this movie before. good news about oil and gas is today's production depletes over time and the industry needs to reinvest cash flow and in many
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cases in excess of production levels. i view this as a window of opportunity. we got to be careful. not all supply is created equal. you have to be careful about high cost production far from markets and there may be plenty of production between you and the marketplace and just like other commodities, the low price producer will win the ultimate battle between supply and demand when prices factor into it. we have been steady and focused on north america. >> give me a natural gas prediction. is the price going to stay around these levels or will we go higher from here? >> i think that the big wild card is weather. if we have a nonweather winter like we had last year, prices where they are today could go back down because we have increased production coming on this year. our economic models basically show that with 1% to 2% u.s.
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economic growth and normal winter, the market is pretty well balanced. the strip price today, which is 350 in the near month going out to $4 two or three years from now is about the price where expenditures can be qualified. it's the same story for natural gas as long as we've been investing. >> appreciated. thank you. >> great to talk to you. >> that was a ferocious covering of shorts on zipcar last week when they came through controversial stock. the ceo will join us next on the program. and of course rick santelli is waiting in the wings for the next hour of "squawk on the street." hi, rick. >> hi, simon. definitely waiting in the wings and we're going to continue to stick with the cnbc theme rise above. remember, on the rise above button, it doesn't have that one-way street sign we see in chicago and new york and it doesn't have do not enter.
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and yet after everything we've been through, post-button world, it seems like only revenues are the topic. it's okay to enter. what about reform of the entitlement programs? eamon javers said today benefits are off the table. it's not a one-way button. top of the hour be there. ♪
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welcome to the world leader in derivatives. welcome to superderivatives.
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the car-sharing service zip car says it's on track to record its first full year of profitability. so can it turn the stock around? which, of course, has been really depressed. down about 45% this year. joining us exclusively is zip car's chairman and ceo, scott griffith. good morning. >> morning. >> when you came through with your results on thursday night, that was a phenomenal covering of the shorts. i think the stock rose about 30% at one stage. what are you now saying about the business? >> well, we had a great quarter on the strong results of the quarter. we were able to raise our guidance for the year. and a big milestone for us. this will be our first full year
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of profitability on a gaap basis. and i think there have been a lot of questions about whether car sharing can be a profitable business, and i think we're putting that to bed, which is a huge milestone for us. also, we have a basket of markets we call our established markets, which are the first four markets we launched. d.c., new york, boston, and san fran. and the margin expansion in those markets beat even our prior estimates of where we might go. so the margins are continuing to expand as well. >> let me pick up on some of those metrics. a lot of people are very negative on the stock. i've got mkm partners. they think it will half in value to $4. they have a stock recommendation. on that question of margins specifically, you don't break out your fleet costs, do you? in the present environment, presumably you're making money, because that is theamic that, as you sell cars, they are -- it's a higher margin experience now than arguably it might be next year. >> there were three or four factors in our margin expansion, quite frankly. quite frankly, the vehicle sales and proceeds from sales was the smallest of the three or four
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i'm speaking of. so most of it came from improved utilization and other margins. we've dropped our costs quite a bit. we got into the asset-backed security markets half a year ago and rolled our entire fleet into the abs. that took 300 or 400 basis points out of our cost of capital on the fleet side. and as that's rolled in, that's really expanded the margin. it's been more about that than selling cars at a great price. >> i think the overall concern that people have is the massive ramp-up in competition. you just look at mercedes is going it, car-to-go, you've got enterprise, which is so dominant in the higher cars, bringing its brands together. avis has a new technology. and people would say, structurely, can zstructure ly, can zipcar survive. >> it must be a validation if all these companies are starting to look at it and see the potential. our estimate is about a $10 million market globally in the top 100 cities.
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so we welcome more competition. it's not new to us. we certainly had competition for years here in new york and other markets. and we've continued to expand much faster than most of our competitors for that period of time. i think the big thing for us is our brand, right? i mean, most people that think about car sharing and using cars by the hour or cars as a service think of zipcar as kind of the iconic brand. we really represent the category. and that plus our technology, and first to scale really matters in this business. i would say, first in isn't as important as first to scale. it's a classic network affects business, where scale really starts to build on itself, both in terms of marketing and technology investment. so we're going to see more competition. we knew that, we talked about that even on the road show. >> i'm sorry, you don't have deep pockets like enterprise or avis or hertz, do you? you know, they are so big. their budgets are potentially so fast. they have so many outlets. you're not first to scale. >> that's why profitability is so important. this sort of proof point that we
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delivered to wall street. that we don't have to keep investing in the business itself. we're investing in growth, we're buying more companies now. we just bought a company in vienna, so we're expanding our network. they're all launching different brands. they don't have the technology. it's a very different business model than the traditional rental car business. we really think our competition is car ownership and other services that are around. and that's really how we think about the business model and competition. >> that's what i wanted to ask you about. we are in a time where vehicle sales are increasing, particularly here in the united states. do you see that as your number one threat? i mean, how do you see your piece of the pie relative to the number of people who used to just want to share a car, but now can actually afford to buy a car and are buying them, in fact? the numbers prove that out. >> yeah, they do. it's a little different in cities, in our experience. we have 300 universities now, we announced that in the quarter, that we now have a network of 300 schools. so the millennials in particular, and people who live in cities, are thinking very
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differently about transportation. you see these new services coming along, i think the mobile phone and mobile technologies will be as important to transportation as the invention of the car itself. and we've seen this coming for years. and why is because people are now choosing to use zipcar, they're taking bike sharing, they're even figuring out when the subway or bus is coming through their mobile phone app. and oober, this sort of instant access by the trip, in making choices through a series of mobile phone apps is where the world is moving, especially in millennials and particularly in cities. so we think that will buck the trend that you just said. and while that people are buying more cars, we think this idea of buying mobility by the trip through mobile phone apps, including zipcar, is really the big trend in cities and among millennials. >> it's a brave new world. >> it's really going to be exciting. this is sort of what we -- and our brand is sort of what really represents the leading brand in that category. that's what makes it exciting for us. >> thanks for coming in, scott. good luck with the business. scott griffith there from
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zipcar. tesla's ceo elon musk naming his model "s" sedan the 2012 car of the year. that's coming up at 11:40 a.m. eastern time. from local communities to local businesses.
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with the dow now up 61, catching some traction here. interesting that the dow, we split it out, with the outperformance of the upside by dpoe a depot, our stomach today. >> definitely waits just sort of bookending the dow, with microsoft down by 89 cents, and depot is up to 83. retail movers also on the spotlight. of course we pointed out, jcpenney is managing to catch a little bit of a bid. you've got to take a look at it as two separate companies, a new company and an old company. he's very optimistic still. take a look at macy's, though, because the readthrough could be that macy's continues to gain share on the back of jcpenney's woes. and cores is a big part of macy's and what they offer. there is an upside to the shares of macy's. >> tonight on "fast"?
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>> we'll take a look at macy's with john stemberg, and we're also trading the lockup expiration tomorrow in facebook shares. if you want to buy the stock, when do you do it? we'll handle that. >> interesting, ap is saying that tomorrow is the 40th anniversary of the dow crossing 1,000 for the first time. 40 years ago, it managed to hit 1,003. sort of takes you back. i think it was before our time. see you tonight. i don't know where simon is. and david will see you tomorrow if you're just joining us, here's what you missed earlier this morning. welcome to hour three of "squawk on the street." here's what's happening so far. >> there will be pain. less pain now through austerity or risk a complete collapse of society in five to ten years' time. >> it's very hard to look at this company on a consolidated basis. so on a consolidated basis, it
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looks terrible, you're right. what he's doing is winding down the old jcpenney and using the cash flow from the old jcpenney to grow this business. >> now we have to get fiscal tax issues resolved to we can actually solidify, our customers can feel better and we can participate more with them. >> i was most concerned that this company would have a big dip right here, but didn't skip a beat. really well run. stock was initially down badly, off of a negative series of headlines that misinterpreted the charge. this one could be off to the races. >> i think the problems that this sort of confirms everybody's fears about windows 8, that we have no idea that this product's out there, despite the dollars spent, and that people don't want to buy any pc anyway with this thing in it. how does microsoft win on this? and that's why this news is so troubling. >> opening bell here. s&p the top of your screen. >> the reason why the stock's gone up is quite frankly, i think the investment community has had an opportunity to really kind of look inside our company
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and understand what the value drivers are. which was a little tougher to do when we were part of marriott. good tuesday morning. we're live here at post nine of the new york stock exchange. i want to get a check on the markets, which are finally finding some sea legs here. dow's up 72. s&p's up 7. nasdaq up, not quite as much. actually, it was the nasdaq earlier this morning that briefly dipped into correction territory. that line, by the way, is 2877, we're about 20 points above that. home depot, the biggest gainer oen the dow, after reporting better than expected third quarter results, raising its outlook for the year. and the company also saying it's seeing the path toward the healing. saks trading sharply lower after the company says hurricane sandy did hurt its business. the retailer lowering its fourth quarter sales outlook as a
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result. let's get to the road map this morning. the surprise departure of microsoft steven snosky. and a builder tells us how his company and employees will be hurt if congress cannot come to an agreement. and the tesla model "s" named motor car of the year, beating out lexus and bmw. the ceo, elon musk will join us to talk about taking the automaker to the next level. and the tech maker that made its name in ecards is going back to basics. paperless post is launching a line of paper cards. the ceo will be with us live to explain that move. but we'll start with microsoft, the worst performer on the dow today, down almost more than 4%. this is on the news that executive stephen sinofsky is leaving the company. david, good morning. >> good morning, carl. >> let's put the motive aside as to why he's leaving, at least
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for the moment. how big of a hit is this? >> i think it's mixed. on one hand, sinofsky was known as a great manager to get products out on time. he was known for that. and in office, he was brought over to the windows division after the vista flop. and that's his strength. his weakness is he's known for not necessarily playing well in the sand box, and this is a time that microsoft certainly needs to get all of its divisions working together. >> every grain of sand is important to work together. you're referring to reports that, i guess, widespread, not common knowledge, that he was known to be, quote, abrasive, some say. that he held back some products, that i guess did not help him, necessarily, politically. i mean, what else is new, right? that goes on in corporate america every day. >> that's true. and that's why, you know, the stock's reacting a little bit on the downside here, because from an investor standpoint, he was known for kind of rejuvenating windows a little bit after vista
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and being an aggressive manager. and as a steward of one's investment, investors like that. if employees don't happen to like that, that's not an investor's concern. >> so at 27 here, almost about 10 cents above $27, is this a playable trade? is his departure and potential surrounding his successor, is that material to the stock? >> well, if you believe in the opportunity, it obviously gives you a better entry point here. we're neutral on microsoft. we think the stock is largely going to be driven by its success or failure in tablets and mobile. despite some of the success they're having on the enterprise side, i think those are the two debatable points that's going to decide the fate of this stock over the next year. and we, for us, the jury's still out on tablets and mobiles in microsoft. >> what does this do to balmer's image? i mean, here's an executive that has survived literally for
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years, david, with people calling for his head. does this add to that yoke around his neck, or does he just sail on as usual? >> i think this will build investor antagonism, maybe, towards more ballmer. i think another reason the stock is down is there's more than a handful of investors that would like to see a change of management at the very top and sinofsky was often viewed as a likely number two and successor to ballmer, and with his departure, there's no other obvious successor to mr. ballmer. so i think some investors are interpreting it as steve is going to be around for maybe longer than they, ideally, would like. >> yeah. that's an important insight, might explain some of the action we're seeing today. david, appreciate you coming to the phone on last-minute notice. good to talk to you. >> thanks, carl. >> meantime, a select group of business leaders set to meet with the president at the white house tomorrow, discussing how to best deal with the fiscal cliff. but one big part of the economy
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was left off the invitation, and that is the banks. kayla tausche is back at hq. talk about getting snubbed. >> if we know anything, it's that the banking industry doesn't let its feelings go unheard. but that being said, the president's extended those invitations to 12 ceos to a cross-section of industries, but wall street was left off that list. it's not representative of the only meeting that the president will have with business leaders. initially, this is comprised of consumer-facing businesses. ken chenault appears to be the only one related to the banks on that list. it is surprising considering how many consumers the country's largest banks actually do service. and even toe the banks won't be part of this week's private brain trust on the income cliff, officials at the banks have been
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making their cases known for some time. just this morning, brian moynihan, the chief executive of bank of america said the mere existence of the fiscal cliff is holding back client activity, even as other parts of the economy are recovering. goldman sachs chief executive lloyd blankfein said this morning he expected there would be a resolution, though there remains substantial risk that things go wrong. until it's wrong, there will be a lot of uncertainty in the market. and on cnbc last week, jpmorgan's ceo, jamie dimon, said the economy could boom if not for the fiscal cliff. regardless of the attendance at tomorrow's meeting, it's a pretty safe bet, carl, that the banks are making themselves heard. >> and you may have mentioned it already, but chenault is going to be there from amex? he has may be a special relationship with the white house. >> he will. and i think a lot of people would argue, even though the banks are consumer facing, through retail businesses, through credit card businesses, american express does capture a large part of that market too. so that representation is there, but nonetheless, we have heard from a lot of those ceos. no doubt that that string of comments will continue.
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>> thanks so much, kayla. talk to you later. meantime, a stealth rally continues in one tech stock. let's get over to bertha coombs. >> you know, the first conference call where she's been in charge of the quarter on october 23rd, and that stock has really been on a stealth rally since that october 23rd, up 12% since then, hitting daily new highs, right now taking out an 18-month high today. not huge moves to the upside, but the volume in the trading in yahoo! has been moving up. and at this point, they're set to take up a two-year high if they can get above the $18 range. so it's one to watch right now. >> interesting. all right. thank you so much, bertha coombs. let's hop over to the see and meet group this morning. rick santelli with the santelli exchange, talking a little raising above. right, rick? >> absolutely. and i like the theme. i just, i'm a little disappointed that it seems to be a one-way street. so the topic today is, revenues,
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reform, and random memory. and i'm not talking the computer type random memory. let's talk about revenues. that's the one-way street. that's the only form of rise above i've heard anything about. and this morning, i actually caught a chunk of "squawk box," i was on an earlier train. and what's the topic? about how various trusts and how lawyers and accountants, of course, are going to be very business trying to protect millionaires and billionaires from any type of reform. i believe raising taxes on anybody right now is a bad idea. but there is no mandate. if there was a mandate, the mandate was millionaires and billionaires. but they're affording a lot of accountants and lawyers. so if you're really going to do this, washington, try to do it right. in terms of random memory, you know, i was out at ec, englewood cliffs the day of and the day after the election. and the day after the election, i happened to be sitting next to john podesta, who is going to be at this big news conference today.
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let's listen to what i asked him and what his answer was on the seventh wednesday of last week. run the clip. >> what was the highest revenue ever for funds coming into the government? i believe it was in the second term of -- >> of clinton. >> no -- >> no, it was the second term of clinton. >> let me get this straight. of course, mr. podesta has a pedigree resume, to be sure, chief of staff in the clinton years and currently he's at the center of american progress right now. but i'll tell you what, the center obviously doesn't count mathematics. because all's he has to do is go to the tax policy center, they have a website, dot-org, and in current dollars, $2.4568 trillin is the most the government's ever come in, and in constant dollars, it's $2.414 trillion. what's the movie out right now
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"skyfall," and math has certainly fallen, because the answer is 007, with a 2 in front of it. if we can't get the head of the center for american progress to even understand this. if this didn't even come out by mitt romney, no wonder he lost. that's so easy. how are we going to get any meaningful reform if we don't get meaningful answers to easy mathematics. you know, this is about results. and if this was a corporation and people were taking vacations, taking trip, and not reporting back to work, lame duck or not, shame on them. i've said it many times. roll up your sleeves and have meetings, not press conferences. meetings. like, ten minutes ago. back to you. >> as as opposed to this friday, yeah. we'll see how this week shapes up. rick, talk to you in a few moments. rick santelli in chicago. still ahead, the real cause of the financial cliff. plus, fresh off the "motor trend" magazine naming his model "s" sedan the 2012 car of the year, elon musk, the ceo tesla will join us at post nine.
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if a budget is not agreed upon to avoid the fiscal cliff, the average middle class family will pay almost $2,000 more in taxes. >> that is just one of the potential consequences of going over the so-called fiscal cliff. now it's time for another capital markets op-ed. gary kaminski is here with a special guest. good morning, gary. >> good morning, carl. and we keep these running these different things related to the fiscal cliff. i know many of you are confused.
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many people have asked me, specifically, what does it mean for business? i am visited by peter bam, who have joined us a number of times to give us the real story on china. he's done a great job letting you know, because it's a no bs kind of segment. you write an op-ed, you run a small business, you have 80 employees, 40 in new york, 40 in hong kong. you put this op-ed together and you talk specifically about what is happening and how it relates to your business. and i want viewers to understand the numbers, the math. not the politics. >> right. >> so first off, affordable health care act. what does it mean in terms of what you have had to do for your employees? >> okay. our employers were getting $6,500 before taxes for their flexible spending account. now, because of the affordable health care, they're getting $2,500 that they can deposit. that $4,000 went from before taxes to after taxes. that is an onerous thing for someone who has two kids and has to go to doctors for checkups. >> okay, why can't you make it up? why can't you reimburse the employees, give them more benefits on your end to make up for that loss in the fsa?
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>> to keep our health care manageable, and we just absorbed an 11% increase on behalf of our employees, we renewed in august, it would be untenably expensive to try and make up that kind of -- >> so basically, in layman's terms, your operating margins would be crushed if you had to make it up on your end. >> absolutely, absolutely. >> okay. why should i not be watching this segment saying, you're just complaining, you don't want to pay higher taxes, like many people who are businesspeople. why is it, specifically, what is happening related to your business in terms of employee growth, in terms of equipment. explain, again, in simple terms, math. no politics here. >> no politics. we're economic pragmatists. it's very simple. we are a sub-s. if you tax the company 10% more or you tax me 10% more, they're one in the same. that's 10% out of my cash flow. you take 10% out of my cash flow, i've got to stop and think. am i going to make that capital investment? am i going to hire that one or two extra employees? or should i sit back and be 100%
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sure that i'm safe before i em onthat? now, that contrast with in 2011, where there was accelerated depreciation, and we moved our offices to larger spaces. we hired movers, tradesmen, we bought carpeting, computers, we bought furniture. and then with the extra cash, because it was accelerated depreciation, we were able to go out and we identified a business that we invested in and hired four or five more employees. hopefully that will grow and pay dividends to us, and at the same time, the government will accumulate additional tax revenue. >> i want to ask you this. you are an investor. i know you. you're a long-term investor, in terms of your own personal portfolio. i want to know, all these fears, these concerns, being a business person and being an investor, what have you tried to do personally as a result of these concerns, as it relates to your business. you know, being the typical small business person, that we hear people in washington talk
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about so much. what have you done personally in your own asset allocation? >> well, we have moved to or i have moved to a much more conservative demographic. what that means is, we have more bonds, dividend-paying stocks, and we're collecting coupons and hoarding cash. the reason we're hoarding the cash is we don't know if the taxes go up, we may have to reinvest that cash in our business. because as i said, we're sub-s, so the businesses may, and i'm the business. >> one last question here. we've heard a lot about people selling stocks, locking in gains. have you sold any stocks in the last week as a result of that? >> no. >> so you don't believe that's happening? >> no. >> so people selling stocks is more about hoarding cash because they need it for their own businesses? >> absolutely. >> that's very helpful. thanks very much, peter. and carl, you can read peter's op-ed on the special website we have dedicated here. i thought we were going to put it in here, but carl, you probably know the address about where viewers can go and learn more about the fickle cliff.
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>> gary, thanks so much. when we come back, elon musk, the ceo of tesla motors and spacex tells us why he's so confident that electric cars can go mainstream. the question, of course, is when. back after a quick break. like a high-speed train. and you don't want to miss it with thinkorswim by td ameritrade. you get knock-your-socks-off tools, simple one-click orders, real-time paper trading to hone your skills, plus anytime you need it support. ♪ stocks, options, futures, and forex. get your trading on track. thinkorswim by td ameritrade. trade commission free for 60 days, plus get up to $600 when you open an account.
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welcome back to "squawk on the street." i'm bertha coombs. we've been watching shares of netflix over the last half hour or so. shares have been rising and spiking. carl, some traders on the desk are saying this is continued speculation over what might happen now that carl icahn is pushing for some sort of sale or other. some rumor s out there about th possibility that they may be looking at a strategic adviser. >> interesting. he has resisted the notion of going hostile. at least, that is what he said on his last appearance on "fast money." we'll see what that story brings us. thanks, bertha. let's get to rick santelli in chicago, taking a look at markets in the fiscal cliff. rick? >> we have dan sussage with us. always a good guest. you know what, dan, the more i read about the post-election
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issues, the more it seems like, back to the past. it just seems like blah, blah, blah. nothing is going to get done. but let's switch gears. i guess that's politics. even after an election? >> right. >> how are the markets going to deal with this? it certainly doesn't look like anybody's rolling up their sleeves, on c-span, letting us in, see what's going on. >> if you look at what the markets have been doing since the election, i think it's a clear indication of the fact that they're worried about what's not going to happen. after the election, boehner came out, thought he'd move some, and then obama came out the next day, and in the early part of his speech, he looked good. and all of a sudden he starts digging in. if you look at what the stock market did, it immediately dropped. came back a little bit that day, but immediately dropped. that's what's in people's minds and it's scaring the heck out of them. we have to have some solution. >> when we look to europe, it's a very similar scenario. we have all these issues revolving around greece and
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maybe to a lesser extent, spain, and it seems about the same dynamics. that it isn't results oriented, it's idle the car and hope things get better while you're sitting in there, hunkered down. >> that's absolutely the case. they have been spinning their wheels. fortunately for us, we've gotten away from the european situation, somewhat. because it looks like our economy can gain some traction. but it's immediately going to grind to a halt if we don't see something. >> you know, there's one area, there's one area that doesn't have the luxury to postpone results. and that's the military. >> right. >> and i would like to shift gears here, quickly. i know veterans day was yesterday, but we have some honor veterans here and we have some active medical sailors here from a local base. and i think that everybody's been giving them a hand. but i would like to give them a hand one more time. and if there's one thing i wish i could beam these guys to the press conference today and the press conference later in the week, because it's all about results. america thanks you for your results-oriented efforts in the
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greatest military of all, the u.s. military. thank all of you. and real quickly, you were world war ii, what branch of the service were you in? >> navy sea base. >> when you look at the military today, obviously, lots of technology, huh? >> oh, yeah. >> when you look at washington, is there any comments or any advice you would give them about solving the problems that you fought so hard to keep this country safe? >> well, keep active, do the things that are right. >> well, i'll tell you what, you have to end it there. do the things that are right. washington, are you listening? back to you. >> so simple, rick. thanks a lot. rick santelli. a few minutes left here in europe's trading day. we'll have the close and some of the details on the impact on our trading, with the dow up 62. don't go away. i always wait until the last minute.
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all this talk about the fiscal cliff here in this country and corporate earnings is really masking a hidden story that is just as dangerous as it's always been. simon hobbs, that is greece. >> and you put it very accurately. we're in a very dangerous situation at the moment. greece has done what the rest of the international community asked it to do in terms of parsing its budgets. but the rest of europe has not given it the money that it needs to pay its bills. and therefore, there is a tail risk that greece could actually default. today, they managed to sell some t-bills. they sold 4 billion euros to cover the bonds that are due on
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friday. but it is, potentially, a very serious situation. let's just count you out and i'll chat through more on the greek banks. here we go. closing up on europe, and not bad session, overall. >> the european markets are closing down. >> and we've got some concerns within telecom, with vodafone, some concern within some of the big power companies in germany about their profitability. but broadly, the markets have been able to make some gains. let me just come back to the central question of greece, though. at issue here is that the rest of the community has said, okay, well, we will give greece more time. effectively, that's what they're saying. but how do you bridge the gap to giving greece more time? how do you pay the bills? how do you make the debt sustainable? the imf is saying, you guys, you governments, you need to take a haircut on what you've done with greece. germany's saying, there's no way we're taking a haircut, because that would be illegal under eu and german rules. so you have a very important
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standoff. and yesterday we had a news conference with lagarde and junker, where they were clearly, clearly angry with each other on what was going on behind the scenes. now, if you look at where we've traded today on the greek stock market, we were down but we've been able to come back because they've raised this short-term money. this 4 billion euros of paper, short-term paper, one and three-month bills in order to pay those bills that are due on friday. next tuesday is when they have the next big meeting in europe to try to sort greece out. but don't let it off your radar, particularly if you're long of the market. the greek banks today -- yesterday i was talking about the recapitalization. we have that announcement, the greek banks were hit quite badly. still the greek banks were on a very, very tight leash from the ecb. the ecb isn't basically softening the rules to get more cash from their own central bank. greek banks down again today, though i think i'm right in saying they're off their lows. but check what we've traded recently on some of these banks. let me show you a chart of two of the biggest banks.
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certainly, national bank of greece, and you'll see we're down 31, 41% from the bounce. it is a bounce that you're then eating into. one last thing that i want to mention to you is where we are on spanish yields. this tension in europe, it hasn't really knocked on to a blowout on spanish yields, but we are now back here to levels at 5.86, perhaps a little bit higher earlier in the session, that we've not seen since september. there is tension in europe. you need to keep it on the radar, more than over the last few weeks, carl. >> simon, we'll see what happens. it's just going to get crazedier over the next few sessions. >> let's hope not. >> simon hobbs. let's get to bob pisani, who's going to take a look -- bob, are you on the floor? where are you? >> i'm right over here behind you. >> what's going on? >> i want to put up the dow industrials. we've had a rather curious little rally this morning. we were down 60 points on the dow right at the open, and we've essentially moved 130 points. a couple of pieces of speculation floating around. one is, of course, president
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obama will be meeting with business leaders, labor leaders this afternoon to talk about the fiscal cliff. there's a lot of expectations of high-profile headlines that are out there, that may be helpful to the markets. that's number one. number two, i want to put up the spanish yield. you heard simon just mentioning that. when i called around and said, boy, this is an interesting little rally, a lot of people pointed to this big plunge in spanish yields that's going on today. i don't have a lot of news for you at all here. there's been some vague speculation that the ecb may begin buying spanish bonds. that's been around for a long time. some vague speculations about that, but that was certainly a factor, i think, in pushing up more markets as well. let me move on here to talk about home depot. the key story of this morning was home depot. i hope y'all don't think that hurricane sandy was the necessary major factor in helping home depot out. it was a factor, but the fact is they made some very positive comments on housing, and they have not been that positive or forward on housing. the ceo this morning saying that this quarter's reflecting the start of the path toward the healing of the housing markets. doesn't sound like much, but
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they've been very neutral on housing so far. housing now is an assist to growth rather than an anchor to growth. that's a big change in the attitude. there's a long, long chart of home depot. we're at a 12-year high in home depot right now. of course, everybody likes it. here's the one problem i have with home depot. 21 times forward earnings. 21. that's a lot. that's a lot of pressure on them, but so far, outstanding management. there's a lot of other reasons, besides sandy, that this stock is firing on all cylinders, including the management. elsewhere, retailers, an excellent day. vix, home depot, kors, tjx all had good numbers, and not terrible numbers on the revenue side either. saks had a bit of a disappointment, impacted by sandy, down about 1% right now. the home builders all moved up and that's because of the home depot comments this morning, up 3, 2% in most of those big names. carl, back to you. >> you've got that multiple number on home depot, raised
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some eyebrows. thanks a lot, bob. the president is going to meet with a group of o ceos tomorrow to discuss possible solutions to the fiscal cliff. earlier on "squawk box," ursula burns, who will be attending, says she's really willing to help, as long as all parts of government are really willing to listen. >> what i'll say to the president is that we're here to help, we're here to work. we do want a balanced solution that helps all, that helps america rise up. but we want to make sure that we are actually speaking to people who will listen, and i'm hoping that the president and the administration and both sides works. >> it's going to be an important meeting and we will be in washington tomorrow as well with special coverage throughout "squawk on the street." meantime, diamond foods earlier and now, another food stock leading the gators today. over to bertha coombs. >> soup's on for campbell's, carl. they are expected to report their earrings a week from today. this food will be looking for 85 cents on the bottom line, $2.37 billion. yesterday they announced a deal with sodastream.
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today they put in new 52-week high, taking out a high from a month ago. back to you. >> thanks, bertha. a little bit later, it's a move worth some ink. we'll find out why paperless post is launching actually paper cards. the ceo will join us live. "squawk on the street" back in a minute. all energy development comes with some risk, but proven technologies allow natural gas producers to supply affordable, cleaner energy, while protecting our environment. across america, these technologies protect air - by monitoring air quality and reducing emissions... ...protect water - through conservation and self-contained recycling systems... ... and protect land - by reducing our footprint and respecting wildlife. america's natural gas... domestic, abundant, clean energy to power our lives... that's smarter power today.
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welcome back. coming up on halftime, trading the tech wreck. apple's in a slump. now microsoft's sagging. what's going on with the biggest sector in the market? congress is back to work. we chart a road map to a deal on the fiscal cliff. and as retail earnings flood the street, which stocks are worth buying? we've got the list of names you want to know. carl, top of the hour. >> all right, scott. see you in a few moments. meantime, time for another capital markets op-ed. gary, i know you're pay attentiing attention to how the long island power authority story is evolving here in new york. it's amazing to watch. >> yeah, sorry, we didn't have the camera ready. tim, when he tosses to me, we've got to be ready. >> wherever you go, there's no light. that's all i know. >> you know, some people will think we set it up that way, carl. but this is not specifically about light, but this is about
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miscommunication, disaster recovery, and a lot more. and i did try to cut through the bs and go out and see exactly what was happening in the field. let's take a listen to one gentleman who was up here from nashville, tennessee, and hear what he had to say yesterday. let's check out that clip. >> give me a sense of how this disaster recovery compares in terms of organization, of what you've seen, when you got up here, compared to other situatio situatio situations you've been involved with. >> it was pretty unorganized, to start with. it got better three or four days. we have a lot of people sleeping in trucks, no showers, no place to eat. >> how does this prepare in terpgs of preparation for a potential disaster versus some of the other things you have seen in the past? >> it seems like communication, there was none. no communication. you know, we just kind of was on our own for a while. >> how many days were you stuck here before you were actually able to do any line work? >> i was fortunate enough to be one of the first ones to get assigneded a crew. i'm a crew guy. but we have guys who probably waited three, four, five days. >> and you've been a lineman for
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how many years? >> 38. >> compare this situation compared to the disorganization you saw? >> i've never had a whole lot of dealing with management, but authenticity done any maintenance on the system, they haven't done any tree trimming on the system and it was just a disaster waiting to happen. >> now, they haven't done any maintenance. now, first of all, carl, a lot of these guys aren't supposed to speak on camera, and i didn't convince a lot of them. we're going to have the whole package on "power lunch" later today and you will not want to miss that, because it's fascinating stuff. again, this is not about light, but it's how you deal with crisis management and how you deal with miscommunication. i have to tell you, as we were out yesterday doing this, and i want to bring this to a specific stock, because i mentioned yesterday, carl, jcpenney, in terms of setting a plan in place and then not willing to be able to deviate from that plan. and a lot of what i see, i know sometimes the connections i make, people say, what is kaminski talking about, but i've got tell you, a lot of the same tough we heard out in the field was that they set up a plan and they were not willing to make
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the changes when that plan wasn't working. and it did make me think about jcpenney and goes back to that original conversation we had with ron johnson back in january when he joined us and said, i'm not going to deviate. so a lot of similarities there. and i also just want to say one other thing. talking about cutting through the bs, i thought peter baum did a great job earlier in the program in letting people know exactly what was happening with small businesses. i didn't have the website address, it's riseabove.cnbc.com. if you want to check out that op-ed, carl, i hope you got a better understanding listening to peter, as i did, exactly what the math is. because it's not about politics, it's about math. >> yeah, i know. and that piece of tape with utility officials, interesting too. you know, the broad expectation is that lipa is not going to be singled out, gary. that the state's going to come down on a lot of these utilities in some way, you know, repeatedly. >> well, i don't want to give away too much, but i've got to just tell you, if i was a -- if i was an attorney, trying to create litigation, i know there's been a number of
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lawsuits filed, just check out at 1:30 today, some of the stuff we got yesterday. i think the lawyers are going to be scrambling and saying, my god, i can't believe what a disaster this was. so, if that's not a tease, i don't know how i could give a better tease for checking this out later today. >> that's good. first comparison i've heard between lipa and jcp too. thanks, gary. first it took the paper out of post, now it's bringing it back. paperless post is offering paper cards. we'll find out why this ecard power house is going back to the real thing. the founders and the ceo will join us next. well, if it isn't mr. margin. mr. margin? don't be modest, bob. you found a better way to pack a bowling ball. that was ups.
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and who called ups? you did, bob. i just asked a question. it takes a long time to pack a bowling ball. the last guy pitched more ball packers. but you... you consulted ups. you found a better way. that's logistics. that's margin. find out what else ups knows. i'll do that. you're on a roll. that's funny. i wasn't being funny, bob. i know.
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paperless post has created a niche industry within ecards. unlike its competitors, users pay for the company's designer online invitations and stationary. now the company is branching out from online to paper, into the greeting card market. paperless post, they're bringing
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paper back. ♪ >> you may know the brand already. alexa and james herschfeld are the brother and sister duo behind paperless post. they join us here at post nine. guys, good to see both of you. welcome. >> thanks for having us. >> the first question, james, why go retro? when you are establishing a brand that at least in the northeast, certainly, new york city is well known as being an e-based company. >> that's an easy one to answer. the reason that we've made this shift from selling e cards to selling actually paper cards, high-quality paper stationary is that our users over the past three years have asked us again and again, they said, you know, i'm sending these ecards for my wedding, for my kids' bar mitzvah, for my 50th anniversary, and i love them, but i have a need for some in paper, or i have a need for all -- you know, i want paper to supplement the product you're already selling me. >> was this always part of the plan, alexa? >> know, it wasn't, although i will say that everything that we've done, we've talked about
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for at least three years before that. sometime sometimes less. but when we first went out and raised money, we did talk to a bunch of people who said, by the way, if you really want to make this a very big company, that's probably what you're going to end up doing. and we weren't close to that, but it was very hard to imagine that at that time. but the reason why it makes sense is because it leverages our core competency. which is, well, there are design and also this design technology, this technology that allows somebody who's not a professional designer to look something that looks like a professional designer created it. so when -- we've said this before, but when 50% of our users ask for something that has it ten times the price point of what you currently have, it's sort of a risk not to try that product. >> walk me through some of the economics, james, of selling a paper card versus the online card. there's more fixed costs, certainly, right? >> there's more fixed costs. the margins are actually lower,
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even though the margins are pretty high. the margins on paper are about 60%, whereas in the virtual product, obviously, it approaches, you know, 100. the average virtual card, we sell for 25 cents, around. and the average paper card is, you know, hovers around $2 a card. so it really is, it's an order of magnitude more expensive, but for people who are used to purchasing paper, the value is really there. and it's compared to the other paper products in the market, it's similar quality. we're able to leverage sort of our online technology to offer this product at a much cheaper price. >> i think what's interesting is, when you guys created paperless post, there were some relatively entrenched actors, already in the market, right? >> absolutely. >> and you appeared to have had no fear about taking them on. alexis, is that fair or was there some trepidation there? >> so we actually had a long period of thinking about paperless post, because we were at other jobs or in school and
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the most important thing in entering the market was something that we learned from reading books and talking to some smart marketing people, which was, we wanted to be so different from the entrenched competitors that, you wouldn't even mention us in the same sentence. even though you know you've seen it before. so in other words, we decided to enter with something that looked really niche, which was formal online invitations. very clearly, that's what it was. >> the animation. >> basically, you could say, oh, the one with the envelope, the one that looks like paper. >> and people would know what you were talking about? >> they would no what you were talking about. and that's exactly what happened, actually. >> finally, you've become, james, a big part of the new york tech scene. i wonder how much that community has evolved, at least as long as you've been doing this. >> well, it's evolved a lot. when we first started out, people, the word on the street was that if we were going to be a big technology company, we were going to have to move to palo alto, and we were going to only be able to build a big team out there. what we've seen in the past
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couple of years is an incredible influx of talent and investment in the new york city technology team, in the technology market. and we think that we're doing just fine here. so it's pretty exciting. >> you're not moving? >> we're not moving, no. we're not. >> please come back. i'll be interested to see how this goes. alexa and james, thank you so much. when we come back, elon musk is here at post nine. he tells us how he plans to turn his niche automaker into a mass market auto supplier. don't go away. you'll also find us in person, with dedicated support teams at over 500 branches nationwide. so when you call or visit, you can ask for a name you know. because personal service starts with a real person. [ rodger ] at scottrade, seven dollar trades are just the start. our support teams are nearby, ready to help. it's no wonder so many investors are saying... [ all ] i'm with scottrade. who have used androgel 1%,
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motor trend naming tesla's model "s" its car of the year for 2013. it's the first time an electric car has ever won the award. elon musk is the ceo of tesla motors. he's not just a car guy, but also a rocket man, as some say, as the founder and ceo of spacex. congratulations. we were just chatting during the commercial break about how this is a big deal. if you're in the car business, this is as close as you can get to an academy award. >> yeah, this is. motor trend car of the year is the closest thing for sort of the oscars or the emmys in the car industry. so it's a great honor to have won it. >> there's some, i think we have some footage of the event last night in which this was
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announced. you beat out some high-profile competitors and you were just saying that motor trend says the race was especially tight this year. >> yes. there were 11 finalists, and they actually, in their words, said that this is one of the toughest years ever. and they actually, they actually said this this is the first time that anyone can remember that it was a anonymous decision of the jury. so everyone said that an electric car was the best car for the first time ever, which i think is, it's a turning point in history. it's really, it's a milestone. >> yeah. >> so how do you think it impacts sales, awareness, adoption, psychological? is it immediate or is this still going to be a longer slog? >> i think it's going to be relatively immediate. the car of the year award has a great deal of credibility in the industry, and with consumers, and that additional validation, i think, is probably what a lot of people were looking for, to buy the car, and particularly, given it was unanimous, given it
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was a strong field, i think this is going to be quite palpable with people's buying decision. >> i think two big events are happening right now. one is this award. the other is what sandy did to the northeast. and just the psychology of waiting in line for gas at a gas station. now, granted, we had electrical grid problems here too, which were problematic. >> yes. >> but has that given -- is that an accelerant to people saying, i'm just not going to buy a car that uses gasoline? >> i think it does help, and i think it's also, things like hurricane sandy, do lend additional credence to the notion of global warming and climate change. you know, as the earth gets warmer, you add more energy to the system, and it increases the probability of things like a hurricane sandy. it just makes it more likely, and when it occurs, the severity is greater, and i think it adds some additional urgency to shift to a sustainability form of transport. obviously, it needs to be combined with sustainable energy production, and i'm a big
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proponent of solar. in fact, solar city is going to be going public at some point in the near future. looking forward to that. but that's a really good combination. in fact, many solar city installations on the east coast, where people have lost power, were places where customers or where communities could charge their cell phones and gain access to the internet, because they had solar power. >> right. when you say going public in the near future, 2013 event? >> that's probably about as much as i can say, given it's sort of a quiet period. but, the reason i can say that is because, the filing is there. so, that's not your information. >> let's talk about, you know what happened to the stock, when production targets were brought down. does 2013 look in tact? >> yes, i feel very confident about 2013. our production target for 2012
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did go down. i think a lot of people didn't quite appreciate about that reduction is that it was not demand related. we're production limited. not demand limited. so as long as the sales weren't down, just production went down. and because we're at a very sharp portion of our production ramp, just by moving a month of production into next year, actually resulted in a big percentage decline in 2012, because most of our production occurs in the fourth quarter. >> right. you became a bit of a political football during the campaign season. >> a political punching bag, maybe. i wish i was a political football. >> better to be a football. used by both the governor and the president as an argument for or against subsidies, solar power, green energy. how relieved are you that the president was re-elected? >> i'm just relieved the election's over. oh, my god! i was tired of getting pummelled. but, and, you know, actually, politically, i'm somewhat of an independent. i've supported both republicans and democrats.
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i'm not a hard-core one way or the other, and i mean, i think i'm moderate. frankly, i think i'm probably right where most americans are, actually. >> but you would agree that maybe the policies from the democrats are more favorable to a company like yours? >> i do. the nature of the two-party system is that any given issue is going to fall into either the republican or the democratic camp. and that doesn't mean that one agrees with all the things in one camp or the other. i think most americans wouldn't say that they agree with everything, you know, in one camp or another. but that's just the way it goes. and i do think that in this case, that the democratic side is right about environmental issues. that's not to say that the most extreme elements are right about, but it's substantially right, i think, about the environmental issues. and i do think it's wise for us to take action. i just do. i think it's the right thing for the future. you know, and if i may, sort of dwell on the argument for a nt